REG - Blue Star Capital - Half-year Report
28/06/2023 07:00
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RNS Number : 1112E Blue Star Capital plc 28 June 2023
28 June 2023
Blue Star Capital plc
("Blue Star" or "the Company")
Half-Yearly Results
Half-yearly Results for the six months ended 31 March 2023
Executive Chairman's Statement
I am pleased to report Blue Star's half-yearly results for the period ended 31
March 2022.
Highlights
· The Company's two principal investments, representing
approximately 94% of the portfolio's value, continue to make steady progress.
No new investments were made during the period.
· The Company incurred a pre-tax loss for the period of
£1,165,942, (H1 2022: loss £996,806).
· The cash position of the Company at 31 March 2023 was £155,563,
compared with £113,416 as at 31 March 2022. The value of the portfolio of
quoted investments held by the Company at 31 March was approximately
£147,000.
· The NAV per share as at 31 March 2023 was 0.2p.
This announcement contains inside information for the purposes of the UK
Market Abuse Regulation.
The Directors of the Company are responsible for the release of this
announcement.
For further information, please contact:
Blue Star Capital plc +44 (0) 777 178 2434
Tony Fabrizi
Cairn Financial Advisers LLP +44 (0) 20 7213 0880
(Nominated Adviser & Broker)
Jo Turner / Liam Murray
About Blue Star
Blue Star is an investing company with a focus on new technologies. Blue
Star's investments include SatoshiPay Limited, a payments business using
blockchain technology; 4 early-stage to mid-level esports companies, including
Dynasty Gaming & Media Pte. Ltd., whose B2B white label platform is a
full-stack gaming ecosystem; and Sthaler Limited, an identity and payments
technology business which enables a consumer to identify themselves and pay
using just their finger.
Forward looking statement disclaimer
Certain statements made in this announcement are forward-looking statements.
These forward-looking statements are not historical facts but rather are based
on the Company's current expectations, estimates, and projections about its
industry; its beliefs; and assumptions. Words such as 'anticipates,'
'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar
expressions are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject to known
and unknown risks, uncertainties, and other factors, some of which are beyond
the Company's control, are difficult to predict, and could cause actual
results to differ materially from those expressed or forecasted in the
forward-looking statements. The Company cautions shareholders and prospective
shareholder holders not to place undue reliance on these forward-looking
statements, which reflect the view of the Company only as of the date of this
announcement. The forward-looking statements made in this announcement relate
only to events as of the date on which the statements are made. The Company
will not undertake any obligation to release publicly any revisions or updates
to these forward-looking statements to reflect events, circumstances, or
unanticipated events occurring after the date of this announcement except as
required by law or by any appropriate regulatory authority.
Chairman's Statement
The first half of the year has been one of steady progress for the Company's
two main investments. As previously stated, it is the Board intention to
establish up to date valuations for these two investments during 2023. A
formal sales process has been initiated by the Board for its stake in
SatoshiPay which is expected to complete by the end of 2023. There is no
guarantee this will lead to an acceptable offer or that the Board will accept
an offer. Below we provide the following portfolio company highlights,
inclusive of updates, for the six-month period ended 31 March 2023 and any
subsequent developments.
Dynasty Gaming and Media ("Dynasty")
The Company first invested in Dynasty in October 2019. Over the intervening
period, Dynasty has built a leading esports and gaming platform. Having
successfully built the platform, Dynasty's business model has, over the last
18 months, evolved from being a pure SaaS provider to that of an operator
where it can fully benefit from the technology platforms it has developed.
Recent deals have seen it take up ownership rights in the businesses with
which its partnering, as described below.
In October 2022, Dynasty announced that it had signed a distribution agreement
with Indosat Ooredoo Hutchison ("IOH"), Southeast Asia's second largest
telecommunications company, with almost 100 million subscribers in Indonesia.
This agreement sees Dynasty deliver Web3 Play to Earn ("P2E") games, developed
by Pioneer Media Holdings Inc, to IOH which will actively promote to their
extensive subscriber base. The first P2E title, which has been localised for
the Indonesian gaming market will be launched imminently. Additional titles
are planned to be released during the second half of 2023.
Dynasty also announced that it has entered into a 50/50 joint venture in
Australia with Lets Play Live ("LPL") in May 2023. The board understands that
LPL is the region's leading esports tournament organiser and content creator
with over 400,000 existing customers and long-term partnerships with the
world's leading games publishers. The JV launched in Australia in May
2023 and is understood to be the most significant gaming platform and
community in Australia.
Dynasty is also building close relationships with two of the Company's other
portfolio businesses, Googly Media Holdings ("Googly") and Paidia Gaming
("Paidia"). Googly had a soft beta launch in May 2023 which proved highly
successful. India is a particularly exciting market, being arguably the
fastest growing gaming market and already the largest mobile gaming
market with 500m gamers forecast to grow to 800m gamers within the next 5
years. Dynasty's partnerships with Googly and Paidia sees it
sharing 50% of all revenue generated. Paidia is a female focused business
and brand based in North America and is performing strongly.
To date, the Company has invested approximately £968,000 in Dynasty. Based on
Dynasty's valuation of US$50 million in the last equity fundraising round, the
Company's holding in Dynasty is valued at approximately US$6.5 million
(approximately £5.4million).
Googly and Paidia
The Company owns 0.6% of Googly which on the basis of the most recent external
valuation was worth approximately £59,000. The Company also invested in 2022
and this is currently valued at cost of approximately £59,800.
SatoshiPay
The Company first invested in SatoshiPay in January 2017. SatoshiPay's mission
is to connect the world through instant payments. To achieve this ambition,
SatoshiPay has focused on building the Pendulum Network Project ("Pendulum")
which was established in June 2021.
Pendulum, a smart-blockchain infrastructure technology company, aims to
decentralize forex and traditional finance, by providing the missing link
between fiat currency and De-Fi ecosystems through a sophisticated smart
contract network.
In the period under review, Pendulum has achieved a number of key operational
milestones. In December 2022 Pendulum completed its crowdloan as a precursor
to it becoming a Polkadot Parachain. Pendulum's crowd loan was the fastest
parachain crowdloan in the history of the Polkadot ecosystem, demonstrating
the strong support and enthusiasm for Pendulum's integration into the Polkadot
ecosystem.
Pendulum parachain went live on Polkadot mainnet in February 2023 and the
corresponding utility token called PEN was listed on MEXC in March 2023 under
the name PENDULUM (https://www.mexc.com/de-DE/exchange/PENDULUM_USDT
(https://www.mexc.com/de-DE/exchange/PENDULUM_USDT) ).
Finally, earlier this month Pendulum released "Spacewalk", its blockchain
bridge connecting the Stellar and Polkadot networks. Pendulum described
Spacewalk as a trust-minimized bridge that supports the smooth and seamless
transfer of stable assets between the two ecosystems, allows closer
collaboration in the De-Fi sector and drives synergies between traditional
fintech services and the De-Fi sector.
Pendulum is committed to advancing foreign exchange ("Forex") trading into the
blockchain space to integrate a tranche of the $6.6 trillion traded daily in
Forex markets. It is hoped that the Spacewalk bridge will serve as critical
infrastructure to bring initial stablecoin liquidity required for Forex
trading to Pendulum and, in turn, to all of Polkadot and
Stellar. The nabla.fi (https://www.nabla.fi/) team (formerly known as
0xAmber.com) are about to launch their novel-design decentralized exchange
with oracle-guided pricing and single-sided liquidity provision for maximum
capital efficiency and attractive FX rates on chain.
As of 31 March 2023, Blue Star has invested approximately £1.9m in SatoshiPay
which represents a shareholding of 27.9% of SatoshiPay's issued share capital,
worth £4.3m, based on the last external fund raise in 2019. It is the Board's
view that the valuation of SatoshiPay may have increased significantly since
the last fund raise and it has therefore appointed a specialist firm to carry
out a sales process to ascertain the market value of the business. There is no
guarantee that this will lead to an acceptable offer and no obligation on the
Board or SatoshiPay to accept any offer but the Board believes this is the
only viable way to independently value its stake in SatoshiPay.
Sthaler
The Company invested in Sthaler in June 2015. Sthaler is an Identity
authentication business FinGo delivers a reliable, fast, and secure method of
identifying an individual at a point of sale or service to not only
personalize and enrich the experience, but to tackle fraud and financial
exclusion. Individuals are anonymous by default; the ethos of the business is
to protect the fundamental human right to privacy. FinGo uses near infra-red
(NIR) light to illuminate and reveal the hidden pattern of veins within a
person's finger. FinGo encrypts the pattern and then stores it on a server,
cloud or blockchain as an instantly usable anonymous "key" linked to a digital
wallet (an app). The wallet enables a user to add debit and credit cards or
virtually any online account and is approved to authenticate multiple payment
types including payment cards and real-time payments (bank
account-to-account).
During the period under review, Sthaler has built on its existing partnerships
in Australia, Poland, UK and Egypt and secured further partners and customer
opportunities in the Netherlands, Israel, Ethiopia, Guatemala. Although
Sthaler's technology applies to almost all sectors, the current focus is in
the following sectors: general retail, banking, healthcare and gambling.
Blue Star invested £50,000 in Sthaler and as of 31 March 2023 the Company's
holding in Sthaler is valued at approximately £398,000, based on Sthaler's
last completed fundraise.
Quoted investments
The Company currently holds 11,951,500 shares in Guild Esports plc and 62,500
shares in East Side Games Group Inc. These investments currently have a
combined value of approximately £93,762.
Outlook
The Board remains focussed on supporting its current portfolio businesses with
the objective of establishing up to date market values in the second half of
2023. The Company's two principal investments continue to achieve significant
operational milestones and the Board remains confident that the portfolio
retains significant potential.
Tony Fabrizi
Executive Chairman
Statement of Comprehensive Income
for the six months ended 31 March 2023
Unaudited Audited
Six months ended 31 March Year ended
30 September
2023 2022 2022
£ £ £
Revenue - - -
Loss on disposal of investments (81,491) - (338,836)
Fair value movements in financial instruments designated at fair value through (730,155) (900,037) (445,223)
profit or loss:
(811,646) (900,037) (784,059)
Share based payment (243,248) - -
Administrative expenses (111,626) (100,642) (517,003)
Operating loss (1,166,520) (1,000,679) (1,301,062)
Finance income 578 3,873 54
Loss before and after taxation and total comprehensive income for the period (1,165,942) (996,806) (1,301,008)
Loss per ordinary share:
Basic and diluted loss per share (0.02p) (0.02p) (0.03p)
The loss for the period was derived from continuing operations and is
attributable to equity shareholders.
Statement of Financial Position
as at 31 March 2023
Audited
Unaudited
Six months ended 31 March Year ended
30 September
2023 2022 2022
£ £ £
Non-current assets
Financial assets at fair value through profit or loss 10,389,061 11,463,552 11,390,278
Convertible loan note - 158,323 -
10,389,061 11,621,875 11,390,278
Current assets
Trade and other receivables 16,700 28,243 8,072
Cash and cash equivalents 155,563 113,416 86,575
172,263 141,659 94,647
Total assets 10,561,324 11,763,534 11,484,925
Current liabilities
Trade and other payables 69,511 44,825 70,418
Total liabilities 69,511 44,825 70,418
Net assets 10,491,813 11,718,709 11,414,507
Shareholders' equity
Share capital 4,892,774 4,892,774 4,892,774
Share premium account 9,575,072 9,575,072 9,575,072
Other reserves 243,248 - -
Retained earnings (4,219,281) (2,749,137) (3,053,339)
10,491,813 11,718,709 11,414,507
Statement of changes in equity
as at 31 March 2023
Share capital Share premium Other reserves Retained earnings Total
£ £ £ £ £
Six months ended
31 March 2023
At 1 October 2022 4,892,774 9,575,072 - (3,053,339) 11,414,507
Loss for the period and total comprehensive income - - - (1,165,942) (1,165,942)
Share based payment - - 243,248 - 243,248
At 31 March 2023 4,892,774 9,575,072 243,248 (4,219,281) 10,491,813
Six months ended
31 March 2022
At 1 October 2021 4,892,774 9,575,072 - (1,752,331) 12,715,515
Loss for the period and total comprehensive income - - - (998,806) (998,806)
At 31 March 2022 4,892,774 9,575,072 - (2,749,137) 11,718,709
Year ended
30 September 2022
At 1 October 2021 4,892,774 9,575,072 - (1,752,331) 12,715,515
Loss for the year and - - - (1,301,008) (1,301,008)
total comprehensive income
At 30 September 2022 4,892,774 9,575,072 - (3,053,339) 11,414,507
Statement of cash flows
for the six months ended 31 March 2023
Unaudited Audited
Six months ended Year ended
31 March 30 September
2023 2022 2022
£ £ £
Operating activities
Loss for the period (1,165,942) (996,806) (1,301,008)
Adjustments for:
Finance income (578) (3,873) (54)
Fair value losses 730,155 900,037 445,278
Impairment of convertible loan note - - 150,846
Loss on disposal of investments 81,491 - 338,836
Share based payment 243,248 - -
Working capital adjustments
(Increase)/Decrease in trade and other receivables (8,628) 107,258 127,429
Decrease in trade and other payables (907) (189,317) (163,725)
Net cash used in operating activities (121,161) (182,701) (402,398)
Investing activities
Proceeds from sale of investments 189,571 - 192,867
Interest received 578 11 -
Net cash generated from investing activities 190,149 11 192,867
Net cash generated by financing - - -
activities
Net increase/(decrease) in 68,988 (182,690) (209,531)
cash and cash equivalents
Cash and cash equivalents at 86,575 296,106 296,106
beginning of the period
Cash and cash equivalents at 155,563 113,416 86,575
end of the period
Notes to the Interim Financial Statements for the six months ended 31 March
2023
1. Basis of preparation
The principal accounting policies used for preparing the Interim Accounts are
those the Company expects to apply in its financial statements for the year
ending 30 September 2023 and are unchanged from those disclosed in the
Company's Report and Financial Statements for the year ending 30 September
2022.
The financial information for the six months ended 31 March 2023 and for the
six months ended 31 March 2022 have neither been audited nor reviewed by the
Company's auditors.
2. Critical accounting estimates and judgements
The Company makes certain estimates and assumptions regarding the future.
Estimates and judgements are continually evaluated based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. In the future, actual
experience may differ from these estimates and assumptions. The estimates and
assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year
are discussed below:
Fair value of financial instruments:
The Company holds investments that have been designated at fair value through
profit or loss on initial recognition. The Company determines the fair value
of these financial instruments that are not quoted, using valuation
techniques, contained in the IPEVC guidelines. These techniques are
significantly affected by certain key assumptions. Other valuation
methodologies such as discounted cash flow analysis assess estimates of
future cash flows and it is important to recognise that in that regard, the
derived fair value estimates cannot always be substantiated by comparison with
independent markets and, in many cases, may not be capable of being realised
immediately.
In certain circumstances, where fair value cannot be readily established, the
Company is required to make judgements over carrying value impairment, and
evaluate the size of any impairment required.
3. Share based payment
All services received in exchange for the grant of any share-based
remuneration are measured at their fair values. These are indirectly
determined by reference to the fair value of the share options/warrants
awarded. Their value is appraised at the grant date and excludes the impact of
any non-market vesting conditions (for example, profitability and sales growth
targets).
Share based payments are ultimately recognised as an expense in the Statement
of Comprehensive Income with a corresponding credit to other reserves in
equity, net of deferred tax where applicable. If vesting periods or other
vesting conditions apply, the expense is allocated over the vesting period,
based on the best available estimate of the number of share options/warrants
expected to vest. Non-market vesting conditions are included in assumptions
about the number of options/warrants that are expected to become exercisable.
Estimates are subsequently revised, if there is any indication that the number
of share options/warrants expected to vest differs from previous estimates. No
adjustment is made to the expense or share issue cost recognised in prior
periods if fewer share options ultimately are exercised than originally
estimated.
Upon exercise of share options, the proceeds received net of any directly
attributable transaction costs up to the nominal value of the shares issued
are allocated to share capital with any excess being recorded as share
premium.
Where share options are cancelled, this is treated as an acceleration of the
vesting period of the options. The amount that otherwise would have been
recognised for services received over the remainder of the vesting period is
recognised immediately within the Statement of Comprehensive Income.
4. Loss per ordinary share
The calculation of a basic loss per share is based on the loss for the period
attributable to equity holders of the Company and on the weighted average
number of shares in issue during the period.
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